Credit Risk and Financial performance: An empirical study of deposit money banks in Nigeria (Published)
Money deposit banks’ ability to mitigate credit risks has been a contemporary and controversial debate in literature, in contributing and extending the frontiers, this study examined the effect of credit risk on financial performance of money deposit banks in Nigeria. The study adopted an expo facto research design, descriptive and using inferential statistics to analyse the data. The population consisted of all the 19 money deposits banks (MDB) listed on the Nigeria stock exchange as at 31st December, 2018. A sample of 13 MDB were chosen on purpose, based mainly on availability of complete data within the study period under consideration. The study covered 169 firm-year observations for the period of 2006-2018. The study extracted secondary data from the financial statements of the banks explored for the study. The study identified three variables of financial performance (dependent variable) surrogated with return on capital employed (ROCE), the independent variable of credit risk proxied with non-performing loans, capital adequacy ratio, loan loss provisions loan to deposit ratio and the control variables of bank Size. The study found that credit management had a positive significant effect on financial performance of the MDB.(Ad R2=0.028,F(4,4170) =2.26;P-value <0.05)When the control variable of bank size (BSZ), stronger effect was exhibited, the study found that credit risk with bank size had a stronger significant effect on financial performance of MDB in Nigeria(Ad.R2=0.4311,F(4,4170)=321.95;p-value<0.05). The study concluded that credit management influences the financial performance of Deposit Money Banks in Nigeria. The study recommended that management of the MBD should design and maintain a robust credit management strategy and framework as well as stringent credit policy that would decrease non-performing loan and default level; and improve their performance level in Nigeria.
The Determinant of Bank Credit Risk: Comparative Analysis of Conventional and Islamic Banks in Indonesia (Published)
Credit/financing is bank’s core business following with credit/financing risk. Increasing and decreasing of credit/financing risk affected by external factor such as macroeconomic variables also internal banking factor. The aim of this research is to analyse which macro (GDP, exchange rate, consumer price index, Bank Indonesia Certificates/Sharia & money supply) and micro (loan/financing to deposit ratio, capital adequacy ratio, operational efficiency ratio) variables the most affecting to credit/financing growth and credit/financing risk. This research utilized Vector Error Correction Model (VECM). The result of this research showed Bank Indonesia Certificates and money supply as macro variables have the most influence, and CAR as internal factor has the biggest contribute to credit growth. For financing growth, macro variables that have biggest influence are exchange rate and Bank Indonesia Certificates Sharia, as for micro variable CAR has the biggest contribution. Credit risk affected by Bank Indonesia Certificates, and for micro variable, LDR has the biggest influence. For financing risk, Bank Indonesia Certificates Sharia has the biggest influence, and OER has the biggest contribution.
The Recommendations Enhancing The Effectiveness Of Credit Risk Management For Commercial Banks In Ho Chi Minh City (Published)
In Vietnam, the commercial banks are in virtually the country and have been subject to a great deal of regulations. One of the regulations is the minimum capital commercial banks must keep absorbing loss if unexpected things happen. Besides, the credit risk is one of the most significant risks that banks face, considering that granting credit is one of the main sources of income in commercial banks. Therefore, the management of the risk related to that credit affects the profitability of the banks. The aim of the research is to provide readers with accurate information regarding factors affecting the credit risk management of commercial banks in Ho Chi Minh City and the researcher has the recommendations enhancing the effectiveness of credit risk management for commercial banks in Ho Chi Minh City. The study results showed that there were 250 managers of commercial banks in Ho Chi Minh City who interviewed and answered about 19 questions. Data collected from June 2016 to December 2016 for commercial banks in Ho Chi Minh City. The paper had been analyzed KMO test, Cronbach’s Alpha and the result of KMO analysis which used for multiple regression analysis. Managers’ responses measured through an adapted questionnaire on a 5-point Likert scale (Conventions: 1: Completely disagree, 2: Disagree, 3: Normal; 4: Agree; 5: completely agree). Hard copy and online questionnaire distributed among 1.000 managers of commercial banks in Ho Chi Minh City. In addition, the exploratory factor analysis (EFA) results showed that there were five factors, which included of factors following human resources (X1), macro environment (X2), customer (X3), technology capabilities (X4) and financial capabilities (X5) with significance level 5 percent. In addition, all of five components affecting the management of the credit risk at commercial banks in Ho Chi Minh City with significance level 5 percent. The research results processed from SPSS 20.0 software.